The number of agreed house sales over the past month was 15% up on this time last year, according to Rightmove, as buyers anticipate “gamechanging” interest rate cuts they hope could come as early as August.
Britain’s biggest property website said homebuyers largely shrugged off the “distractions” of the general election and the Euro 2024 football tournament to keep transactions well above this time last year.
It said the average price of property coming to the market for sale dropped a fractional 0.4%, or £1,617, to £373,493, although it warned prices in the south-east fell by 2% alone.
However, Rightmove said the number of sales being agreed was now an “encouraging” 15% above the same period a year ago and sales were likely to increase by the autumn. This time last year the UK market was struggling to cope with the peak of mortgage rates.
The Rightmove director Tim Bannister said many would-be home movers were waiting for the first Bank of England rate cut, from a current level of 5.25%, before acting.
Households’ hopes of a cut in interest rates received mixed messages last week. On Wednesday the chief economist of the Bank of England, Huw Pill, said key measures of inflation remained “uncomfortably high”, somewhat dampening hopes of an early August rate cut.
However, a number of big-name lenders appeared to think otherwise, as by the end of last week they had all cut the price of their best mortgage deals.
The UK’s biggest lender, Halifax, reduced its rates by up to 0.13%, while Barclays reduced them by up to 0.33%. The bank’s five-year fixed-rate mortgage is now the cheapest on the market at 4.08%.
Their moves follow a series of cuts from lenders including NatWest and HSBC over the past few weeks. A rate war appears to be under way, say brokers.
Adrian Anderson, the managing director of the brokerage Anderson Harris, said cheaper mortgage rates would have a positive impact on people’s ability and willingness to borrow.
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He also said he would not be surprised to see some five-year fixed-rate mortgages priced below 4% by the end of the year.
Rightmove said that the average five-year fixed rate was now 4.97%, which while substantially below the peak of 6.11% in July 2023, is still much higher than the average of 2.51% that homebuyers were being offered back in July 2021.
Rightmove’s Bannister said interest rate cuts could be the gamechanger that would kickstart the market.
“A first base rate cut [by the Bank of England] for over four years, together with the new political certainty, could set the scene for a positive autumn market, with improved affordability and a more confident outlook in the second half of the year,” he said.